...but one must set the output level such that it can handle the loudest passage(s) without clipping
Granted, but that's not a particularly complicated situation. Digital material has a pretty absolute maximum volume for its output signal. The loudest possible signal from your over-compressed, peak-limited pop music CD is at the same level as for your most refined classical recording.

LPs and tapes are not quite so precise in their output limitation but still, there are no giant surprises lurking. I noted before that I've transferred a lot of LPs and open reels to digital so I get a very exact visual indication of what's on the analog source.

Without fail, the only giant dynamic peaks I ever see well beyond the average loudness level are invariably a click or pop in a vinyl record. This is for everything from the ordinary pop/rock pressings to classical to Sheffield type recordings.

Open reel recordings are limited by tape saturation issues once out of their linear range. Similarly, LPs have a set of limitations that revolve around playing time and the amount of low bass content. A record producer is also aware he has no control over the playback systems of the end users so needs to keep modulation levels within generally acceptable parameters for stylus tracking.

The only recordings that I know of as exceptions are specialty ones. Tom Danley once did a recording of fireworks that will challenge a system beyond any available commercial recording, but for me that is a novelty. It is certainly not something I'll elect to build my system around. (Note, you can download the wav file from his web site at http://www.danleysoundlabs.com/techn...downloads.html.)

The net result is that, during the average loud passages of the vast majority of musical recordings, there is simply little chance that some hidden 15 dB or 20 dB peak is lurking, just begging to be clipped by our system. Even in classical music, most of the unusually large peaks were lost during the recording process due to the natural compression imposed by mikes, recording consoles and other devices once pushed out of their linear range. And, as we know from pop/rock recordings, there is a lot of artificial processing that can be further lumped on top of this.